DP15972 A Scientific Approach to Innovation Management: Evidence from Four Field Experiments

Author(s): Arnaldo Camuffo, Alfonso Gambardella, Danilo Messinese, Elena Novelli, Emilio Paolucci, Chiara Spina
Publication Date: March 2021
Keyword(s): field experiments, Management Practices, Scientific entrepreneurship, strategic decision-making, uncertainty
JEL(s): L21, L26, M13, M21
Programme Areas: Organizational Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15972

Our model shows that managers and entrepreneurs make better decisions under uncertainty if they adopt a scientific approach in which they formulate and test theories. The model predicts that they are more likely to terminate projects with negative returns, commit to projects with positive returns, or pivot to projects with higher returns. We test these implications by combining the results of four Randomized Control Trials (RCTs) involving 754 start-ups and small-medium enterprises and 10,730 data points over time. The empirical analysis corroborates the predictions of the model.